Women Entrepreneurship: Issues and Policies

[Pages:74]2nd OECD CONFERENCE OF MINISTERS RESPONSIBLE FOR SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)

PROMOTING ENTREPRENEURSHIP AND INNOVATIVE SMEs IN A GLOBAL ECONOMY:

TOWARDS A MORE RESPONSIBLE AND INCLUSIVE GLOBALISATION Istanbul, Turkey 3-5 June 2004

WOMEN'S ENTREPRENEURSHIP: ISSUES AND POLICIES

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed:

To achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy.

To contribute to sound economic expansion in member as well as non-member countries in the process of economic development; and

To contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.

The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention).



? OECD 2004. Applications for permission to reproduce or translate all or part of this material should be made to: OECD Publications, 2 rue Andr?-Pascal, 75775 Paris Cedex 16, France.

2

FOREWORD

At the first OECD Conference of Ministers responsible for SMEs, hosted by the Italian government in Bologna, Italy, in June 2000, Ministers from nearly 50 member and non-member economies adopted the "Bologna Charter for SME Policies". They envisaged the Bologna Conference as the start of a policy dialogue among OECD Member countries and non-Member economies and that it would be followed up by a continuous monitoring of progress with the implementation of the Bologna Charter. This dialogue and monitoring have become known as the "OECD Bologna Process". The second OECD Conference of Ministers Responsible for SMEs, hosted by the Turkish Ministry for Industry and Trade, envisaged by Ministers at Bologna, provides an occasion to assess the impact on SMEs of new developments relating to globalisation.

This report is one of ten background reports prepared for the Istanbul Ministerial Conference, the theme of each of the ten reports being linked to a specific Workshop of the Ministerial Conference. Several earlier versions of the report were reviewed by the Working Party on SMEs and Entrepreneurship whose comments have been incorporated into the final version. Non member economies participating in the OECD Bologna Process have also had an opportunity to provide comments. This final report also sets out some policy messages and recommendations that have emerged from the preparatory work undertaken in the OECD Working Party for SMEs and Entrepreneurship. The wide variation in stages of economic development, institutional arrangements and political context across the economies participating in the Bologna Process, now more than 80, means that not all parts of specific policies and programmes are appropriate for all participants. The messages and recommendations outlined below provide material from which governments may choose to draw in promoting innovative SMEs in the global economy. In broad terms, these policy messages and recommendations elaborate on the themes developed in the Bologna Charter. Ministers will consider these and other recommendations in their deliberations at the Istanbul Conference.

This report was prepared by Fr?d?ric Delmar and Carin Holmquist of the Center for Entrepreneurship and Business Creation, Stockholm School of Economics, Stockholm, Sweden, in close collaboration with the OECD Secretariat (SME unit).

This report is issued on the responsibility of the Secretary-General of the OECD. Views expressed are those of the authors and do not necessarily reflect those of the Organisation or its member governments.

SME Unit website: Conference website:

3

TABLE OF CONTENTS

FOREWORD...................................................................................................................................................3

EXECUTIVE SUMMARY .............................................................................................................................5

BACKGROUND .............................................................................................................................................9

CREATING SYSTEMATIC KNOWLEDGE ABOUT WOMEN'S ENTREPRENEURSHIP ...................13

Assessing the economic impact of women's entrepreneurship .................................................................13 Creating better knowledge for the future ...................................................................................................20 Summary ....................................................................................................................................................28

BUILDING AN ENTREPRENEURIAL SOCIETY BASED ON EQUAL OPPORTUNITY ....................29

A Risk and Reward Framework for Women's Entrepreneurship ..............................................................29 Supply and demand side of women's entrepreneurship.............................................................................32 Obstacles to women's entrepreneurship ....................................................................................................41 Summary ....................................................................................................................................................49

DEVELOPING POLICY RECOMMENDATIONS.....................................................................................51

Major findings............................................................................................................................................51 Key policy recommendations ....................................................................................................................52 The role of policy makers when supporting women's entrepreneurship ...................................................52 Increase the abilities of women to participate in the labour force .............................................................53 Listen to the voice of women entrepreneurs ..............................................................................................55 Incorporate a women's entrepreneurial dimension in considering all entrepreneurship related policies ..55 Promote the development of women entrepreneur networks.....................................................................57 Periodically evaluate the impact of any SME-related policies on the success of women-owned businesses and the extent to which such businesses participate. ...............................................................58 Improve the factual and analytical underpinnings of our understanding of the role of women entrepreneurs in the economy ...................................................................................................59 Conclusion .................................................................................................................................................59

APPENDIX ...................................................................................................................................................69

Women's Entrepreneurship: Issues and Policies

EXECUTIVE SUMMARY

Women's entrepreneurship needs to be studied separately for two main reasons. The first reason is that women's entrepreneurship has been recognised during the last decade as an important untapped source of economic growth. Women entrepreneurs create new jobs for themselves and others and by being different also provide society with different solutions to management, organisation and business problems as well as to the exploitation of entrepreneurial opportunities. However, they still represent a minority of all entrepreneurs. Thus there exists a market failure discriminating against women's possibility to become entrepreneurs and their possibility to become successful entrepreneurs. This market failure needs to be addressed by policy makers so that the economic potential of this group can be fully utilised. While without a doubt the economic impact of women is substantial, we still lack a reliable picture describing in detail that specific impact. Recent efforts initiated by the OECD (1997, 2000) are responses to this lack of knowledge and have focused the attention of policy makers and researchers on this important topic.

The second reason is that the topic of women in entrepreneurship has been largely neglected both in society in general and in the social sciences. Not only have women lower participation rates in entrepreneurship than men but they also generally choose to start and manage firms in different industries than men tend to do. The industries (primarily retail, education and other service industries) chosen by women are often perceived as being less important to economic development and growth than hightechnology and manufacturing. Furthermore, mainstream research, policies and programmes tend to be "men streamed" and too often do not take into account the specific needs of women entrepreneurs and would-be women entrepreneurs. As a consequence, equal opportunity between men and women from the perspective of entrepreneurship is still not a reality. In order for policy makers to address the situation the report makes a number of recommendations.

In order to realise the benefits of policy changes it is important to incorporate a women entrepreneurial dimension in considering all SMEs and growth policies (e.g. meeting women's financing needs at all stages of the business continuum; take-up of business development and support services; access to corporate, government and international markets; technology access and utilisation; R&D and innovation; etc.). Moreover this means periodically evaluating the impact of these measures on the success of women-owned businesses and exchanging good models and best practices, through cooperation with leading international organisations such as the OECD, European Union, APEC, UNCTAD and the ILO, in order to continually improve policies and programmes.

Better qualitative information and quantitative data and statistics are required to profile women entrepreneurs (demographic information, barriers to start-up and growth). This would also assist in promoting awareness of the role of women entrepreneurs in the economy. Using a frame of reference such as that developed in the report could be valuable for the analysis of this information.

It is observed that women entrepreneur networks are major sources of knowledge about women's entrepreneurship and they are increasingly recognised as a valuable tool for its development and promotion. Policy makers must foster the networking of associations and encourage co-operation and

5

partnerships among national and international networks and facilitate entrepreneurial endeavours by women in the economy.

Women's entrepreneurship is both about women's position in society and the role of entrepreneurship in the same society. Women are faced with specific obstacles (such as family responsibilities) that have to be overcome in order to give them access to the same opportunities as men. Also, in some countries, women may experience obstacles with respect to holding property and entering contracts. Increased participation of women in the labour force is a prerequisite for improving the position of women in society and self-employed women.

Key policy recommendations

? Increase the ability of women to participate in the labour force by ensuring the availability of affordable child care and equal treatment in the work place. More generally, improving the position of women in society and promoting entrepreneurship generally will have benefits in terms of women's entrepreneurship.

? Listen to the voice of women entrepreneurs. The creation of government offices of women's business ownership is one way to facilitate this. Such offices could have programme responsibilities such as providing women's business centres, organising information seminars and meetings and/or providing web-based information to those wanting to start and grow a business.

? Incorporate a women's entrepreneurial dimension in the formation of all SME-related policies. This can be done by ensuring that the impact on women's entrepreneurship is taken into account at the design stage.

? Promote the development of women entrepreneur networks. These are major sources of knowledge about women's entrepreneurship and valuable tools for its development and promotion. Co-operation and partnerships between national and international networks can facilitate entrepreneurial endeavours by women in a global economy.

? Periodically evaluate the impact of any SME-related policies on the success of women-owned businesses and the extent to which such businesses take advantage of them. The objective should be to identify ways to improve the effectiveness of those that should be retained. Good practices that are identified in this way should be disseminated and shared internationally.

? Improve the factual and analytical underpinnings of our understanding of the role of women entrepreneurs in the economy. This requires strengthening the statistical basis for carrying out gender-related cross-country comparative analyses and longitudinal studies of the impact of important developments and policies, especially over time.

The report finds that women entrepreneurs play an important role in the entrepreneurial economy, both in their ability to create jobs for themselves and to create jobs for others. In Europe (both European Union countries and other European countries), estimates indicate that there exist more than 10 million self-employed women. In the United States 6.4 million self-employed women provide employment for 9.2 million people and create significant sales. Using the United States ratio between the number of employees and self-employment it may be estimated that employed women in surveyed European countries could employ around 15 million persons. This is a conservative estimate.

Furthermore, self-employment represents one of the most important job opportunities for women. This seems to be a correct conclusion independent of what country or type of economy is observed. Selfemployment represents an important job alternative for many women and perhaps especially for women in developing economies. It is also observed that in all countries women still represent a minority of those that start new firms, are self-employed, or are small business owner-managers.

However, the availability of data is still scarce. To begin with, definitional issues complicate data collection. Furthermore, some national systems prohibit statistics on the individual level, making gender

specific analyses impossible. Even in those few countries where data are available, important information on development over time (panel data) and for the whole population are missing.

Longitudinal data are needed to understand survival and growth among entrepreneurs (men and women), as well as time of entry and exit from business. This is especially important for women entrepreneurs, as (based on current knowledge) the obstacles and challenges they face change with their involvement in the entrepreneurial process. More precisely, as a woman evolves through the entrepreneurial process she will face different obstacles related to the specific stage she is in (opportunity identification, opportunity exploitation and resource acquisition for example). Depending on the nature of those obstacles, only certain categories of women will enter into business and succeed. Consequently, longitudinal data are also very important for monitoring the effectiveness and impact of programmes and initiatives. Currently, the general picture is still based on cross-sectional samples, even if both the scope and the breadth of data available have improved during the last few years.

The second part of the study using an Austrian-economic model of entrepreneurship analyses why women's entrepreneurship is still a relatively untapped economic resource. The model identifies the historically and culturally determined framework conditions (demand side) affecting entrepreneurship and the idiosyncratic prior experiences of enterprising individuals and potentially enterprising individuals (supply side). The model assumes that changes in demand conditions (e.g. technological, market, demographic, institutional and cultural developments) create opportunities that are not equally obvious to everyone, but are discovered and exploited because some individuals have an advantage in discovering specific opportunities. This advantage is provided by these individuals' access to idiosyncratic information and resources. An advantage generated by their prior experiences and their position in the social networks.

The report takes a closer look at how the gender belief system and personal motivation affect the self-selection of women from entrepreneurship (Demand side). From a supply side perspective the role of occupational closure, family policy, tax regime and access to information are investigated. In addition, the report investigates the specific obstacles facing women's entrepreneurship when engaged in the entrepreneurial process, e.g. lack of role models and social position and access to finance.

The major findings are:

? Independent of the way different studies have been conducted, women entrepreneurs are found to have an important impact on the economy, both in their ability to create jobs for themselves and to create jobs for others. Although the actual economic impact in most OECD member countries has not been assessed, women entrepreneurs have an important impact on the economy both by the number of small firms they are able to create and because a number of them are able to create growing firms.

? In all countries women still represent a minority of those that start new firms, are selfemployed, or are small business owner-managers. Obviously, this economic resource, if not untapped, has not been successfully explored yet.

? Specific obstacles to women's entrepreneurship are: type of education, lack of role models in entrepreneurship, gendering of entrepreneurship, weak social status, competing demands on time and access to finance.

? Women's entrepreneurship must be examined both at the individual level (i.e. the choice of becoming self-employed) and at the firm level (the performance of women owned and managed firms) in order to fully understand the differences between men's and women's entrepreneurship.

7

? Women's entrepreneurship is dependent on both demand side (political and institutional framework, family policy and market sources) and supply side factors (the availability of suitable individuals to occupy entrepreneurial roles).

? In addition, women's entrepreneurship depends on both the situation of women in society and the role of entrepreneurship in that same society. Both the factors that affect the gender system and the factors that affect entrepreneurship in society are involved.

? In order to provide accurate statistics on women's entrepreneurship, a number of possible method biases need to be controlled

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download